2015 (6) TMI 1267 - HC - Indian Laws

Delhi HC overturns acquittal in dishonored cheque case, convicts accused under Section 138 for failing to rebut presumption

Delhi HC set aside trial court's acquittal in dishonored cheque case under Section 138 NI Act. Court held that accused failed to rebut presumption under ... Dishonour of cheque - pronote was signed by the witnesses in his presence or not - rebuttal of presumption - HELD THAT:- It is settled law that it would not be open to this Court to set aside an acquittal unless the judgment of the acquittal under appeal appears to be perverse, or based on misappreciation of the evidence. Assuming, that the cheque had been handed over to the complainantappellant in blank by the respondent, the purpose was to enable the appellant to encash it, in the event that the loan was not repaid. Thus, the respondent gave an implied authority to the complainant-appellant to fill up the cheque and encash it - Similarly, once the pronote has been signed and executed by the respondent admittedly, it acts as an acknowledgment of the transaction. The accused-respondent has not been able to produce any evidence in his support that the pronotes had been executed for a loan of only Rs. 50,000/-. It is settled law that the burden to rebut the presumption under Section 139 NI Act is on the accused. The burden on the accused to rebut the presumption is only to the extent of “preponderance of possibilities”, whereas the complainant has to prove its case beyond reasonable doubt. It has also repeatedly been observed that the accused can rely on the evidence brought on record by the complainant to rebut the presumption, and it is not necessary that he has to lead separate/direct evidence. However, in the present case, the accused-respondent has not been able to rebut the presumption of the cheque having been issued for consideration of the amount reflected in the cheque, in the face of the pronotes. The accused is obliged to set up a probable defence. The defence cannot be only a “possible” defence. It cannot be premised on the mere ipse dixit of the accused. There should be some credible material or circumstance available on record which should lead the Court to conclude that the defence/explanation for issuance of the dishonoured cheque is a probable one. For the reasons aforesaid, the findings and conclusions drawn by the learned MM on facts is palpably wrong, and it is also based on an erroneous view of the law. The impugned judgment is set aside. The accused is convicted of the offence under Section 138 of the NI Act - Petition allowed. Issues Involved:1. Legality of acquittal under Section 138 of the Negotiable Instruments Act.2. Evaluation of evidence and presumption under Sections 118(a) and 139 of the NI Act.3. Non-production of witnesses and its impact.4. Discrepancies in the defense's testimony.5. Relevance of the loan not being shown in Income Tax Returns (ITR) and balance sheet.6. Applicability of precedents cited by both parties.Detailed Analysis:1. Legality of Acquittal under Section 138 of the Negotiable Instruments Act:The court examined the trial court's judgment acquitting the respondent of the offense under Section 138 of the NI Act. The trial court had based its decision on the complainant's failure to reflect the loan in his balance sheet and ITR, along with discrepancies in the handwriting on the promissory notes. The appellate court emphasized that an acquittal could only be overturned if it was perverse, based on misappreciation of evidence, or resulted in a grave miscarriage of justice.2. Evaluation of Evidence and Presumption under Sections 118(a) and 139 of the NI Act:The court noted that the respondent admitted his signatures on the promissory notes and the cheque, which created a presumption in favor of the complainant under Sections 118(a) and 139 of the NI Act. The respondent's defense that the cheque and promissory notes were misused after being given as security was not substantiated with credible evidence.3. Non-production of Witnesses and Its Impact:The trial court's emphasis on the non-production of witnesses who allegedly signed the promissory notes was deemed immaterial by the appellate court. The respondent admitted to borrowing money from the complainant, which supported the complainant's case. The appellate court found that the non-production of witnesses did not weaken the complainant's case.4. Discrepancies in the Defense's Testimony:The appellate court highlighted contradictions in the defense's testimony. The respondent's wife, who was produced as a witness, provided conflicting statements regarding the repayment amount. The respondent did not produce any receipt or documentary evidence to support his claim that the loan was repaid. The court found the defense's testimony unreliable and noted that the respondent did not step into the witness box to substantiate his defense.5. Relevance of the Loan Not Being Shown in Income Tax Returns (ITR) and Balance Sheet:The appellate court rejected the trial court's reasoning that the loan not being shown in the balance sheet and ITR discredited the complainant's case. Citing precedents, the court held that non-disclosure of a friendly loan in ITRs does not make it irrecoverable. The loan was given for business purposes and was payable in a short period, which justified its non-disclosure in the complainant's financial documents.6. Applicability of Precedents Cited by Both Parties:The appellate court distinguished the present case from the precedents cited by the respondent. In cases like Vipul Kumar Gupta vs. Vipin Gupta and Satish Kumar vs. State of NCT of Delhi, the complainants failed to prove the loan's existence or the source of funds. In contrast, the present case involved admitted signatures on promissory notes and a cheque, along with the respondent's acknowledgment of borrowing money. The court found the cited precedents inapplicable to the facts of the present case.Conclusion:The appellate court concluded that the trial court's judgment was palpably wrong and based on an erroneous view of the law. The findings and conclusions of the trial court were set aside, and the respondent was convicted of the offense under Section 138 of the NI Act. The court emphasized that the defense must be probable and supported by credible evidence, which the respondent failed to provide.